SERVICE PLAN 2017/18 2019/20 - BC Liquor Distribution Branch September 2017
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BC Liquor Distribution Branch
2017/18 – 2019/20
SERVICE PLAN
September 2017For more information on the BC Liquor Distribution Branch contact:
2625 Rupert Street
Vancouver, BC V5M 3T5
604-252-3000
communications@bcldb.com
Or visit our website at
www.bcldb.comBC Liquor Distribution Branch
Board Chair Accountability Statement
The 2017/18 - 2019/20 BC Liquor Distribution Branch (LDB) Service Plan
was prepared under my direction in accordance with the Budget
Transparency and Accountability Act. The plan is consistent with
government's strategic priorities and fiscal plan. I am accountable for the
contents of the plan, including what has been included in the plan and how it
has been reported. I am responsible for the validity and reliability of the
information included in the plan.
All significant assumptions, policy decisions, events and identified risks, as
of August 31, 2017, have been considered in preparing the plan. The
performance measures presented are consistent with the Budget
Transparency and Accountability Act, LDB’s mandate and goals, and focus
on aspects critical to the organization’s performance. The targets in this plan have been determined
based on an assessment of LDB’s operating environment, forecast conditions, risk assessment and
past performance.
R. Blain Lawson
General Manager and Chief Executive Officer
2017/18 – 2019/20 Service Plan 3BC Liquor Distribution Branch Table of Contents Board Chair Accountability Statement ................................................................................................... 3 Strategic Direction and Operating Environment ..................................................................................... 5 Strategic Direction .............................................................................................................................. 5 Operating Environment ....................................................................................................................... 5 Performance Plan .................................................................................................................................... 6 Financial Plan ........................................................................................................................................ 14 Summary Financial Outlook ............................................................................................................. 14 Key Forecast Assumptions, Risks and Sensitivities ......................................................................... 14 Sensitivity Analysis .......................................................................................................................... 15 Management’s Perspective on the Financial Outlook ...................................................................... 16 Major Capital Projects ...................................................................................................................... 17 Significant IT Projects ...................................................................................................................... 17 Appendix A: Hyperlinks to Additional Information ............................................................................. 18 Corporate Governance and Organizational Overview ...................................................................... 18 2017/18 – 2019/20 Service Plan 4
BC Liquor Distribution Branch Strategic Direction and Operating Environment Strategic Direction We have passed the two-year mark since the wholesale pricing model was introduced, which prompted a series of fundamental changes in the way the BC Liquor Distribution Branch (LDB) does business. The beverage alcohol industry, as a whole, is settling into the ‘new normal’, and we look forward to continuing to work together with our industry stakeholders in this new business environment. As we look to 2017/18 and beyond, the LDB is focused on delivering on our strategic priorities and revenue targets, established by the provincial government, and as outlined in our 2017/18 Mandate Letter. The LDB’s Retail Division will continue to emphasize customer service in all 198 BC Liquor Stores (BCLS), with a particular focus on showcasing a wide variety of products that meet our customers’ needs while reinforcing responsible alcohol consumption through our corporate social responsibility campaigns. These campaigns will encourage the responsible use of beverage alcohol through promotional material and signage at BCLS on themes such as the prevention of drinking and driving, and underage drinking. Securing a warehousing solution in order to meet growing demand was a high priority. The LDB worked with an executive project board, composed of senior executives from across government, on a warehousing solution for the Vancouver Distribution Centre. The lease for the current location will expire in 2019. In February 2017, the LDB entered into an agreement to lease a warehouse facility in Delta for a term of 10 years, with two, five year renewal options. Work is underway to prepare the new facility and we expect to move in spring 2018. Across both the Retail and Wholesale divisions, modernizing our systems and processes remains a top priority for the organization. We are introducing new business tools to support demand planning, strategic pricing and service delivery. This includes extensive upgrades to our IT systems and business processes, such as the roll-out of our modern point-of-sale system to all 198 BCLS. Throughout all of our activities, we will endeavour to instill confidence among our stakeholders, as we continue to deliver customer-centric service through both our Retail and Wholesale divisions, while continuing to work closely with B.C. liquor industry manufacturers and other partners. Operating Environment B.C.’s Economic Growth The Economic Forecast Council (EFC) expects B.C.’s real GDP to grow by 3.0 per cent in 2017 and 2.3 per cent in 2018. For Canada, the EFC projects national real GDP to grow by 2.7 per cent in 2017 and 2.0 per cent in 2018. As such, B.C.’s economic growth is expected to outperform Canada in the coming years. Downside risks to B.C.’s economic outlook include uncertainty regarding U.S. fiscal and trade policy, the potential for a slowdown in domestic activity, as well as risks arising from the challenging economic environment in Asia and the euro zone. Additionally, there are risks related to monetary policy tightening and the uncertainties associated with commodity prices and the exchange rate outlook. 2017/18 – 2019/20 Service Plan 5
BC Liquor Distribution Branch Liquor Policy Modernization The liquor industry in B.C. has recently experienced significant change. The 2013 Liquor Policy Review included 73 recommendations for changes to B.C.’s liquor laws, regulations and policies. This resulted in foundational changes to the liquor industry and to the way the LDB does business, including the introduction of the wholesale pricing model and the separation of the LDB’s Retail and Wholesale divisions. This has required extensive re-tooling of LDB’s IT systems and business processes. In the years covered by this service plan, both the liquor industry and the LDB will continue to respond to and adjust for ongoing efforts to modernize the liquor industry. Increasingly competitive marketplace Following the introduction of the wholesale pricing model and the gradual increase in the number of grocery store liquor licences, the LDB’s Retail division remains focused on being a competitive retailer. The full impact of liquor sales in grocery stores remain to be seen, as the market begins to adopt the new model, but will be closely monitored along with overall economic and industry trends. Improving Wholesale customer service After the separation of LDB’s Retail and Wholesale operations, LDB Wholesale has focused on improving speed to market of new products and improving partnerships with industry, retailers and vendors to forecast demand more accurately. Warehouse Relocation The move of the Vancouver Distribution Centre to the new facility in Delta will allow the LDB to improve warehouse management processes, and acquire material handling equipment and a new computerized warehouse management system. The larger facility will also allow the LDB to provide higher-level customer service to its wholesale customers, and improve productivity and order fill rate. Performance Plan Goals, Objectives, Strategies and Performance Measures The LDB is facing increasingly dynamic times. When looking at both the Retail and Wholesale divisions, our overall mission remains constant: to be a customer-centric, profitable retailer and wholesaler of beverage alcohol dedicated to innovation, exemplary service, helpful product knowledge, and corporate social responsibility. To remain successful, the LDB focuses on five goals: financial performance, workplace quality and employee excellence, customer experience, business effectiveness, and corporate social responsibility. These goals are supported by specific strategies and performance measures. To ensure that the LDB meets its performance targets during a time of fundamental change for the industry, the LDB remains committed to working with its stakeholders and employees to ensure consistently high levels of service and operational efficiency. The goals, strategies and performance measures contained in this plan are in alignment with the Province’s commitments to contain costs, maintain and improve levels of service for citizens and 2017/18 – 2019/20 Service Plan 6
BC Liquor Distribution Branch
build a strong economy. The LDB will engage in ongoing dialogue with, and reporting to, the
Ministry of Attorney General to re-examine goals, performance measures, and strategies.
Goal 1: Financial Performance
Meet financial objectives approved by Government.
Strategies
• Grow sales and effectively manage operating expenses in order to sustain net returns to the
Province.
Performance Measure 1: Net Income
2016/17 2017/18 2018/19 2019/20
Performance Measure
Actual Budget Budget Budget
Net income (in $millions)
1,083.2 1,094.7 1,111.3 1,127.6
Data Source: BCLS sales data is collected from computerized point-of-sale cash register systems and stored in Head
Office databases. Sales made directly to customers by authorized representatives on behalf of the LDB are transmitted to
the LDB and stored in databases. LDB financial statements are audited by the Office of the Auditor General annually.
LDB expense data is captured, stored, and reported by the LDB’s financial system.
Discussion
Net income is the LDB’s contribution to the provincial government from the total sales of beverage
alcohol in the Province and is audited by the Office of the Auditor General of British Columbia.
LDB’s net income is a significant contributor to provincial government revenues. The LDB regularly
reviews market conditions, sales trends and any policy changes, and incorporates these into future
forecasts. The 2017/18 and future year targets have been updated to reflect the latest sales trends,
product mix, and inflation. The forecast also incorporates current mark-up policies (e.g. the reduction
in beer mark-up implemented in July 2016).
Goal 2: Workplace Quality and Employee Excellence
Create a work environment that encourages greater employee engagement.
Strategies
• Enhance staff skills and engagement through leadership development, employee training and
increased communication.
• Implement Strategic Leadership Development for the organization.
• Provide a safe, healthy and harassment-free workplace.
2017/18 – 2019/20 Service Plan 7BC Liquor Distribution Branch
Performance Measure 2: Employee Engagement
2016/17 2017/18 2018/19 2019/20
Performance Measure
Actual Target Target Target
Employee engagement
n/a 71 n/a 71
Data Source: Workplace Environment Survey conducted by BC Stats for the LDB.
Discussion
The LDB measures employee engagement every two years through the Workplace Environment
Survey (WES). Given the overwhelming widespread organizational changes that have occurred in the
past three years, the LDB believes that achieving a two point increase to 71 in 2015/16 was a
significant increase. Maintaining the WES score of 71, in light of the ongoing organizational changes
to come, will be a challenging target to which the LDB remains committed. The next WES will be
conducted in fall 2017.
Goal 3: Customer Experience
Maintain a high level of retail and wholesale customer satisfaction.
Retail Division Strategies
• Continue to renovate BCLS to enhance customer experience with a new service experience, such
as brighter, welcoming store appearance and refrigeration.
• Continuously provide enhanced customer service through ongoing employee training and support
of a customer-centric culture across the retail store network.
• Identify innovative ways to showcase products that are of interest to B.C. consumers.
Performance Measure 3.1: Retail Customer Satisfaction
2016/17 2017/18 2018/19 2019/20
Performance Measure
Actual Target Target Target
Retail customer satisfaction
83% n/a 80% n/a
Data Source: The LDB contracts with professional survey companies to conduct the retail customer service surveys.
Discussion
Every two years, BCLS retail customers are surveyed by a professional survey company to determine
customer satisfaction. Setting a consistent high bar for customer satisfaction ensures the LDB
maintains its customer-centric focus.
Historically, the Retail Customer Satisfaction performance measure has been based on customers who
rated their experience as “good”, “very good” or “excellent”. However, starting 2016/17 fiscal year,
the measure is now based only on customers who rate their experience as “very good” or “excellent”.
2017/18 – 2019/20 Service Plan 8BC Liquor Distribution Branch
This reporting change will better reflect customer satisfaction of their retail experience and enable the
organization to focus on meaningful metrics with greater potential for improvement, but it is also
anticipated to impact reported levels of customer satisfaction from 2016/17 onward.
Wholesale Division Strategies
• Continuously provide enhanced customer service through efficient order processing and
fulfillment.
• Continue to provide enhanced customer service through employee training and support a
customer-centric culture within the Warehouse team.
Performance Measure 3.2: Wholesale Customer Satisfaction
2016/17 2017/18 2018/19 2019/20
Performance Measure
Actual Target Target Target
Wholesale customer satisfaction
68% n/a n/a 80%
Data Source: The LDB contracts with professional survey companies to conduct the wholesale customer service
surveys.
Discussion
Every two years, LDB’s Wholesale customers (public and private retail stores, rural agency stores,
bars and restaurants) are surveyed by a professional survey company to determine customer
satisfaction. Setting a consistent high bar for customer satisfaction ensures the LDB maintains its
customer-centric focus.
2015/16 marked a profound time of change for the B.C. liquor landscape. A new wholesale pricing
model was implemented, which gave an equal price for all retailers, replacing the previous tiered
discount system. LDB Wholesale has been separated from LDB Retail, but there remains some
confusion in the industry about the relationship between the two divisions, compared to pre-April 1,
2015. To prevent this confusion from adversely impacting the wholesale customer satisfaction scores,
the LDB Wholesale team is committed to improving and building relationships with its customers and
work to better understand customers’ perspectives and needs under the new pricing model.
With the separation of Retail from Wholesale, the direct shipping customer accounts serviced by
Wholesale, outbound case picks, bottle picks and deliveries have all increased by up to 40 per cent.
These increases have occurred while the existing Distribution Centre remains constrained to no more
than 10 days of inventory. The Wholesale Division continues to implement many process
improvements and changes across customer service, vendor and item set up, in-stock improvements,
order assembly, and delivery quality.
As the LDB intends to move the Vancouver Distribution Centre to the warehouse facility in Delta in
spring 2018, the next wholesale customer satisfaction survey will be conducted in 2019/20.
2017/18 – 2019/20 Service Plan 9BC Liquor Distribution Branch
Goal 4: Business Effectiveness
Maintain operating efficiencies in a climate of constant change.
Retail Division Strategies
• Improve assortment and demand planning tools by implementing technology to provide the right
product in the right location for consumers.
• Continue utilizing training programs to better equip store employees with product knowledge, in
order to provide quality service to customers.
• Continue with long-term efforts to update BCLS retail systems to reflect the new liquor industry,
improve efficiency and provide a customer-centric retail experience.
Performance Measure 4.1: BC Liquor Store Sales per Square Foot
2016/17 2017/18 2018/19 2019/20
Performance Measure
Actual Target Target Target
BC Liquor Store sales per square
foot $1,380 $1,389 $1,409 $1,430
Data Source: BCLS sales data is collected from computerized point-of-sale cash register systems and stored in Head
Office databases.
Discussion
This indicator is based on the annual dollar sales of all stores divided by total of all stores square
footage. This measures how well BCLS convert floor space into sales. The 2017/18 and future targets
have been revised upwards since the LDB’s previous service plan as a result of modernization efforts,
which have included changes to operating hours at BCLS (i.e. extended operating hours and Sunday
openings), marketing initiatives and the introduction of refrigeration units at a limited number of
stores implemented this fiscal year.
Wholesale Division Strategies
• Continue to modernize the Wholesale Division’s systems and processes, including the use of
current and cost-effective technology, such as forecasting and demand planning.
• Minimize the impact of rising labour cost per case while supporting additional smaller customers
and orders, and additional bottle picks in an environment of limited space causing Distribution
Centre congestion and slower anticipated order assembly.
• With the assistance of an executive project board, complete an approved business plan and begin
the critical work on executing a successful transition to a new warehouse solution, in accordance
with government direction, to allow the LDB to meet growing demand for its services.
2017/18 – 2019/20 Service Plan 10BC Liquor Distribution Branch
Performance Measure 4.2: Distribution Centre Labour Cost per Case Shipped
2016/17 2017/18 2018/19 2019/20
Performance Measure
Actual Target Target Target
Distribution Centre labour cost per
case shipped $1.86 $1.90 $1.80 $1.77
Data Source: Orders and shipments processed by the LDB Distribution Centres are captured and stored by computer
applications designed for this purpose.
Discussion
This productivity measure is calculated by dividing Distribution Centre labour expenses by total case
shipments. Since April 2015, there has been a 30 per cent increase in new customers to Wholesale
with much smaller and more labour intensive orders. This is due to the split between the LDB Retail
and Wholesale divisions and the fact that all private liquor stores, rural agency stores and many
hospitality customers must now order directly from the warehouse. With the lease of the warehouse
facility in Delta, the LDB will be better positioned to provide high-quality and timely service to
wholesale customers.
Performance Measure 4.3: Distribution Centre Order Fill Rate
2016/17 2017/18 2018/19 2019/20
Performance Measure
Actual Target Target Target
Distribution Centre order fill rate
91% 93% 93% 93%
Data Source: Orders and shipments processed by the LDB Distribution Centres are captured and stored by computer
applications designed for this purpose.
Discussion
This is a measure of the percentage of each order filled completely by the LDB Distribution Centres
(Vancouver and Kamloops) and is calculated by dividing the number of ordered items that are filled
completely by the total number of items ordered.
The LDB Wholesale team has been partnering with retailers and vendors to improve forecasting and
planning, and to solve inventory and space shortages to ensure product can be supplied to meet the
needs of customers. Setting a consistent target of 93 per cent in the future strikes the right balance
between the effective management of inventory and the minimization of product stock-outs, and
reflects anticipated additional warehouse space to hold and distribute product.
2017/18 – 2019/20 Service Plan 11BC Liquor Distribution Branch
Goal 5: Corporate Social Responsibility
Encourage the responsible use of beverage alcohol and minimize the impact of operations on the
environment.
Retail Division Strategies
• Prevent sales to minors or intoxicated persons in BCLS through staff education and enforcement
of ID-checking requirements.
• Encourage the responsible use of beverage alcohol through the display of promotional material an
signage at BCLS.
• Promote awareness of responsible use by continuing co-operative programs with suppliers and
other stakeholders and partners.
Performance Measure 5.1: Store Compliance with ID-Checking Requirements
2016/17 2017/18 2018/19 2019/20
Performance Measure
Actual Target Target Target
Store compliance with ID-checking
requirements 96% 100% 100% 100%
Data Source: LCLB administers an ID compliance checking program and provides the results of BCLS compliance to
the LDB.
Discussion
BCLS continue to ensure the enforcement of the ID-checking program to prevent sales to minors and
intoxicated persons, through ongoing employee training and awareness. Compliance is measured
through a program administered by the Liquor Control and Licensing Branch (LCLB). The
continuous target of 100 per cent reflects the critical importance to the LDB of preventing sales to
minors.
Performance Measure 5.2: Customer Awareness of LDB Corporate Social Responsibility
Programs
2016/17 2017/18 2018/19 2019/20
Performance Measure
Actual Target Target Target
Customer awareness of LDB
corporate social responsibility
89% n/a 90% n/a
programs
Data Source: The LDB contracts with professional survey companies to conduct the retail customer surveys.
2017/18 – 2019/20 Service Plan 12BC Liquor Distribution Branch
Discussion
The LDB encourages the responsible use of beverage alcohol through partnerships, promotional
posters and other materials in stores. Every two years, the LDB conducts a customer survey to
measure customer recall of these materials to ensure the LDB develops impactful and relevant
messaging. Setting a high target of 90 per cent for customer awareness of social responsibility
programs represents the high value that the LDB places on this goal.
Wholesale Division Strategies (including Head Office)
• Reduce the impact of operations on the environment by decreasing waste, increasing recycling
rates and achieving carbon neutrality on an annual basis.
• Continue promoting waste diversion and recycling programs at Head Office and Vancouver
Distribution Centre through employee training and awareness campaigns.
Performance Measure 5.3: Waste Diversion Rate at Head Office and Vancouver Distribution
Centre
2016/17 2017/18 2018/19 2019/20
Performance Measure
Actual Target Target Target
Waste diversion rate at Head Office
and Vancouver Distribution Centre 80% 80% 85% 85%
Data Source: Waste diversion rates represent the weight of material diverted from the landfill through composting and
recycling as a percentage of the total weight of waste material generated. Rates will be determined based on measured
weights reported by a contracted waste and recycling service provider.
Discussion
In 2013/14, the LDB developed this performance measure to initially track performance at Head
Office and the Vancouver Distribution Centre. After 2018/19, the performance measure will be
expanded to include diversion rates for BCLS, the Kamloops Distribution Centre, and the new Delta
Distribution Centre.
In 2016/17, the performance measure was determined by using ongoing weight measurements taken
over the entire fiscal year and was expanded to include other materials relative to previous years. This
is an improvement to the prior reporting years which relied on a 24-hour sample to estimate annual
totals. Due to the fact that the new sample model has been used for only one year, the LDB
maintained its target of 80 per cent for 2017/18 with a slight increase to 85 per cent in 2018/19 and
2019/20.
2017/18 – 2019/20 Service Plan 13BC Liquor Distribution Branch
Financial Plan
Summary Financial Outlook
2016/17 2017/18 2018/19 2019/20
($m)
Actual Budget Budget Budget
Sales 3,331.5 3,496.6 3,596.3 3,698.7
Less: Cost of Sales 1,921.5 2,037.7 2,105.1 2,178.2
Gross Margin 1,410.0 1,458.9 1,491.2 1,520.5
Operating Expenses - Employment 194.9 203.7 207.1 213.2
Operating Expenses - Rent 46.5 53.0 55.4 58.1
Operating Expenses - Administration 97.1 116.6 126.4 130.6
Total Operating Expenses 338.5 373.3 388.9 401.9
Other Income 11.7 9.1 9.0 9.0
Net Income 1,083.2 1,094.7 1,111.3 1,127.6
Debt 0 0 0 0
Retained Earnings 0 0 0 0
Capital Expenditures
26.7 82.8 29.2 27.1
Key Forecast Assumptions, Risks and Sensitivities
With the many significant changes that have impacted the liquor landscape in the province - including
the implementation of the new wholesale pricing model, the separation of Retail and Wholesale
divisions by which BCLS became a customer of LDB Wholesale, expanded operating hours and the
introduction of refrigerated products at BCLS and grocery stores to the liquor marketplace - the LDB
continues to closely review and monitor the impacts of these changes on the LDB’s financial and
business operations.
The LDB’s forecast has included the following assumptions:
• Market share and product mix remain relatively stable for all future years.
• Fiscal 2017/18 overall sales growth will be five per cent, driven by volume growth, retail margins
and inflation.
• Overall sales growth for future years will move in line with historical averages and will be 2.8 per
cent due to a combination of inflation and volume growth.
2017/18 – 2019/20 Service Plan 14BC Liquor Distribution Branch
• While grocery stores are now permitted to sell alcohol directly from their shelves or under a store-
within-a-store model, the impact of grocery stores is not yet included since the number of stores
that are selling liquor products remains relatively small.
Capital requirements reflect expenditures for updating and improving stores, technology-related
projects, and ongoing equipment replacements.
In August 2014, the property where the LDB’s current Vancouver warehouse is located (on East
Broadway) was sold. The LDB is leasing the current facility until the warehouse in Delta is ready for
operation.
Sensitivity Analysis
Beverage alcohol is a highly regulated product and its consumption can be influenced by Government
decisions, such as hours of operation for establishments that sell or serve liquor products and drinking
and driving laws, to name just two. These types of policy decisions can have a significant impact on
LDB revenue.
The LDB’s financial performance is also affected by economic conditions:
• Changes in the marketplace – it is still unknown how the introduction of grocery stores as retailers
of beverage alcohol will impact the current retail environment;
• Price competition among suppliers of wine, spirits and refreshment beverages – as the mark-up on
these products is percentage-based, a reduction in the supplier price will result in less LDB
revenue, assuming a constant volume; and,
• Beverage alcohol is a discretionary consumer product and sales are affected by economic
conditions. Consumer confidence dictates the level of entertainment dollars spent on beverage
alcohol. Product mix may also be impacted as it is dependent on consumer purchasing patterns.
Weather patterns and the timing of statutory holidays are other factors that influence LDB revenue. A
hot, dry summer and long weekends result in increased sales, particularly in the refreshment beverage
and packaged beer categories. Conversely, adverse weather conditions have a negative impact on
liquor sales. The day of the week statutory holidays fall on also has an impact on sales – when they
fall on Mondays or Fridays, sales are much stronger than when they fall on Tuesdays or Wednesdays.
The LDB monitors all of these factors, using the best information available to ensure sound decisions
are made on product mix and supply, and staffing for BCLS.
Cost of Goods Sold
Each percentage change in the cost of products in the wine, spirits and refreshment beverage
categories has a direct effect on net income of approximately $14.4 million, due to the percentage-
based mark-up on these products.
Beer has a per litre mark-up and, therefore, cost of sales as a percentage of sales would increase
should the beer producers increase their supplier prices. B.C. wines have lower gross margins due to
the mark-up policy on direct delivery VQA wines and wines produced from 100 per cent B.C. grapes.
As these two categories grow, cost of goods as a percentage of sales will continue to increase.
2017/18 – 2019/20 Service Plan 15BC Liquor Distribution Branch Management’s Perspective on the Financial Outlook The 2013 Liquor Policy Review recommendations led to a significant transformation in the marketplace, and that is expected to continue. Many liquor policy changes have been centred around increasing fairness and competition among retailers. For example, industry called for a single wholesale price to increase transparency and eliminate pricing inconsistencies, and this has resulted in a more equal footing for all retailers. More grocers will eventually meet the regulatory requirements for selling alcohol - another change that will increase competition and have a profound impact on the industry as a whole. The LDB will continue to adapt its operations to meet the changing demands of the increasingly competitive business environment. With the clear separation of the LDB’s Retail and Wholesale divisions, there is different operational oversight for each division within a common corporate management structure. In order to meet the challenges of the evolving beverage alcohol landscape, both Retail and Wholesale will continue to monitor performance, anticipate the direction of the market through the use of predictive analytics, and make changes in order to capitalize on the demands of consumers. At the retail level, all BCLS are now subject to the one kilometre rule, which restricts location proximity from other full-service liquor retail outlets. However, they also now have the option to offer services that align with private retailers. Changes in customer consumption, product mix, gross margin by product categories, and the entry of grocery stores, will be closely monitored and adjustments made where appropriate to meet corporate targets. The LDB’s corporate management will monitor wholesale margins to ensure Government’s revenue targets are protected. The move to the larger warehouse facility in Delta will drive greater efficiencies in product delivery and will better meet future demand of the marketplace. 2017/18 – 2019/20 Service Plan 16
BC Liquor Distribution Branch
Major Capital Projects
Approved
Targeted Project Cost Estimated Anticipated
Completion to June 30, Cost to Total Capital
Major Capital Projects (over $50 million)
Date 2017 Complete Cost of
(Year) ($ millions) ($ millions) Project
($ millions)
Warehouse Relocation 2018/19 1 56 57
The LDB has entered into a long-term lease for a
warehouse facility in Delta. This will position the
LDB to provide high-quality and timely service to
wholesale customers and to all British
Columbians with as little disruption as possible –
resulting in both operational and financial
benefits sooner. The intent is to be operational in
the Delta facility in spring 2018.
The capital cost outlined is funding for material
handling equipment, racking and conveyors, as
well as a new computerized warehouse
management system for the new Delta
warehouse.
Significant IT Projects
Wholesale and Retail Pricing, Store Point-of-Sale Upgrade and Centralized Store
Replenishment System Projects
BCLS became a customer of the LDB’s Wholesale division in April 2015. They are now subject to
the same wholesale pricing as other liquor retailers. As part of the projects that separated wholesale
and retail pricing, the LDB is upgrading the point-of-sale (POS) technology and implementing a
centralized product replenishment system to support the modernization of BCLS and to improve
customer service. To ensure the new systems roll out would go as smoothly as possible and with
minimal impact on customers, suppliers and employees, the LDB piloted a few stores with the new
technology and is now implementing the solutions across all the stores. The LDB expects that all
stores will have the new technology by fall 2017. The total capital cost for these projects is estimated
to be $24 million over the past three years.
2017/18 – 2019/20 Service Plan 17BC Liquor Distribution Branch Appendix A: Hyperlinks to Additional Information Corporate Governance and Organizational Overview The LDB’s corporate governance structure and organizational overview can be found here. 2017/18 – 2019/20 Service Plan 18
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